1. A salesperson at the car dealership gave Amandeep the following table illustrating the comparison of the lease vs. finance options for the vehicle he liked.

Copy the table into your notes and fill in each cell. Some cells will require a calculation using your BAII plus calculator; some will be copied directly from your data set. Dont forget to show your work where possible.

	Leasing the car	Financing the car
Down Payment	3000	3000
Interest Rate (compounded annually)	0.053	0.053
List Price	27800	27800
Additional purchase costs	1551	1784
13% HST		[applied to additional purchase costs and list price]
Net Price
Term in months	60	60
Monthly payments	[BGN] 300* add HST	[END]
Residual (FV) payment to own	Add HST 12400

2. Draw a detailed ktimeline for the lease option. Be sure to include the residual value (with HST) at the end of the last payment interval, the net price, and the after-tax payments at equal payment intervals.
3. Which option would be most economical for Amandeep? Show all calculations and provided a detailed explanation with your answer. Hint: Compare NPVs
4. What should the residual payment be (including taxes) in order to make both options equal?
5. Which option would be most economical if the residual value was $20,000 (including HST) for the lease option? Provide justification for your answer. This is subject of financial math